I think it is more about avoiding being boxed in by the rest of the world. The US would of course ban the use of Chinese hosted models and have already taken steps to ban the use of open Chinese models. There's nothing that could have been done about that. But the rest of the world would likely have adopted American hosted models eventually, the same way they adopted American mobile phones OSes, computer OSes, Office, etc. If the choice was between American hosted AI and Chinese hosted AI they'd choose American if they couldn't develop their own.

But if there's an open model available then they might choose that instead of either of them. Even if the Chinese models aren't used they will bring down profit margin just by existing. They wouldn't have the control the hosted American models give but that wasn't even on the table. But denying America control is a worthwhile strategic goal in and of itself. And they don't even need to expend extra resources to do it, they needed to develop their own models for security reasons anyway.